Compliance News | December 5, 2019

Guidance on Affordable Care Act Reporting for 2019

On December 2, 2019, the Treasury Department and the Internal Revenue Service (IRS) released Notice 2019-63 relating to information reporting required under the Affordable Care Act for 2019. The notice provides guidance on three important issues:

  1. The deadline for distributing Forms 1095-B and 1095-C to plan participants/employees is extended from January 31, 2020, to March 2, 2020.
  2. The notice creates a new enforcement policy that waives penalties for failing to distribute Forms 1095-B to participants if certain conditions (described below) are met.
  3. The notice continues the IRS policy of not imposing penalties for incorrect or incomplete information when reporting entities act in good faith and distribute and file the required forms on time.

The new enforcement policy may be useful to multiemployer health plans and insurers that do not wish to mail paper copies of the Form 1095-B to participants, but have websites where they can post information about the availability of the forms.

Background

The Affordable Care Act created new reporting requirements related to enforcement of the individual shared responsibility penalty, the employer shared responsibility penalty and the premium assistance tax credits (available to certain individuals when purchasing coverage through the federal Marketplace/state Exchanges).

Self-insured multiemployer plans meet their responsibilities by distributing Forms 1095-B to plan participants and filing those forms along with the associated transmittal form (Form 1094-B) with the IRS.

Large employers (including multiemployer plans that are large employers) meet their responsibilities by distributing Forms 1095-C to full-time employees and filing those forms along with the associated transmittal form (Form 1094-C) with the IRS.

New Relief for 2019

Treasury and IRS acknowledge in the notice that Congress reduced the Affordable Care Act’s individual shared responsible penalty to zero effective January 1, 2019.1 This means that individuals do not need to receive a Form 1095-B documenting their enrollment in coverage for 2019. Nonetheless, since Congress did not change the reporting rules, reporting entities are still required to comply with the reporting laws.

Notice 2019-63 states that the IRS will not impose a penalty if a coverage provider fails to distribute Form 1095-B to plan participants when the following two conditions are met:

  1. The reporting entity posts a notice prominently on its website stating that individuals may receive a copy of their 1095-B upon request. This notice must provide an email address and physical address to which a request may be sent, as well as a telephone number to use for asking questions.
  2. The reporting entity provides Form 1095-B to any responsible individual2 within 30 days of the date the request is received.

This relief only applies to the Form 1095-B, not to Form 1095-C. However, if a large employer uses the Form 1095-C to report coverage of an individual who is not a full-time employee for any month of 2019, the enforcement relief would apply.

This relief does not affect the requirement to file these forms with the IRS by the required deadline, which means that reporting entities will still need to complete and file all required forms. The deadline for filing these forms is February 28, 2020 (if filing on paper) or March 31, 2020 (if filing electronically, which is required when filing 250 or more forms of either type).

Other Relief

The notice continues two types of relief provided in prior years:

  • The IRS is extending the deadline for distributing these forms to plan participants/employees from January 31, 2020, to March 2, 2020. Of course, reporting entities that choose to take advantage of the Section 6055 relief discussed above would not have to meet this deadline.
  • The IRS is extending its enforcement policy of waiving penalties for incorrect or incomplete information provided the reporting entity has acted in good faith and distributed and filed the forms on time.

As noted above, there is no change in the deadlines for filing forms with the IRS.

Final 2019 Forms Not Released Yet

The IRS has released draft reporting forms and instructions for the 1095-B, 1095-C, 1094-B and 1094-C, but has not yet released the final versions of these forms. Final forms should be posted on the IRS website soon. The draft forms are the same as the 2018 forms and the draft instructions indicate no change in the way reporting entities complete the forms for 2019.

Implications for Reporting Entities

Reporting entities should do the following:

  • Contact any third-party vendor that handles distribution of these forms to clarify roles and responsibilities for the 2019 reporting year.
  • Watch for release of the final forms and instructions for 2019.
  • Plan sponsors that distribute a Form 1095-B should decide whether they wish to provide paper copies of the form or, instead, post a notice on the plan’s website stating that individuals may receive a copy upon request. Plans that wish to take advantage of the new limited relief should consult with their plan professionals on the appropriate steps to take to comply with Notice 2019-63.

 

1 The Tax Cuts and Jobs Act, Pub. L. No. 115-97 reduced the individual shared responsibility payment to zero for months beginning after December 31, 2018.

2 The “responsible individual” is generally the plan participant (i.e., the employee or former employee), but the term would also include a family member who gets coverage independently (such as a former spouse getting continuation coverage through COBRA).

 

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